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Ireland’s manufacturing sector experienced expansion for the first time since February thanks to a ‘fresh upturn’ in new orders, AIB data showed on Friday.
July’s steep rate of production decline seen meanwhile showed signs of returning to stabilisation, and costs declined at considerably softer rates.
The headline Manufacturing PMI posted 50.8 in August, up from 47.0 in July and 47.3 in June, and marking the first time in six months the indicator has moved above the neutral 50.0 threshold.
‘A pick-up in new orders was a key driver of the improvement in Irish manufacturing in August,’ said AIB Chief Economist Oliver Mangan. ‘They rose for the first time in six months, with particularly strong growth in new export orders, which ended a 14-month sequence of declines.’
However, the overall rate of expansion was still marginal and weaker than the historical average.
Companies responded to expanding order book volumes by adding to their headcounts throughout the month, causing a ‘solid rise’ in employment in what AIB called ‘the most robust hiring amongst firms since February’.
Increased demand also caused production to near the point of stabilisation, with output only decreasing ‘fractionally’ and at the weakest rate in the current six-month sequence of decline.
Purchasing activity continued to decrease in August, but the rate of contract softened considerably since July. Meanwhile, companies recorded a back to back accumulation in finished goods stocks and work backlogs depleted for the sixteenth consecutive month.
Prices continued to fall, underpinned by the increasing cost of energy and raw materials, but did so only slightly and at the weakest rate since February.
Firms proclaimed ‘historically elevated’ levels of optimism concerning the rest of this year’s output, mainly thanks to the increase in demand.
‘It will be interesting to see, though, if the expansion in Irish activity in August can be sustained given the ongoing weakness of manufacturing globally,’ Mangan commented.
S&P Global compiles the AIB Ireland Manufacturing PMI from survey responses by purchasing managers from around 250 manufacturing firms.
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